Last week, we reviewed the survivors of a deadly week for risky assets: carry trades, emerging bonds, corporate credit, with a bunch of equities and commodities were the last to stay afloat after the worst week the markets had experienced since 2009. Today, we inspect last week’s survivors, reaching the following conclusions:

The long haven/short cyclical assets stance gained more clarity last week after the rally of OECD countries’ bonds and the slump of European equities. However, it is too early to declare the victory of the haven assets over the cyclical assets army. Indeed, although the recent storm has claimed new important victims among cyclical assets, [...]

The financial system faces the threat of an imminent breakdown. As usual, the PIIGS’ sovereign debt and the euro zone banks are at the heart of the storm. The recent statement of the German Finance Minister rejecting a “carte blanche for the widespread purchases of sovereign bonds by the EFSF on the secondary market” [...]

Archive for August, 2011

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